6 ms·

Inflation is high, so interest rates need to go up to try to slow that, but the economy isn't doing amazing already, and higher interest rates won't help that.

by kadoban 18d ago

Inflation is high, so interest rates need to go up to try to slow that, but the economy isn't doing amazing already, and higher interest rates won't help that. Not to mention the US debt is _high_ as hell and bond yields mean that's more expensive. And the country is run by a broken fool who has no interest or ability to fix any of that.

ihsw 18d ago
[dead]
rayiner 18d ago
> And the country is run by a broken fool who has no interest or ability to fix any of that. Trump will be gone in three years, but you'll still have an electorate that wants more free stuff while also getting tax cuts. There is zero appetite for fiscal reform in the U.S. The geometric growth rate of U.S. debt has been consistent since 2010 and will remain so when AOC is President: https://usafacts.org/answers/how-much-debt-does-the-us-have/country/united-states/ https://usafacts.org/answers/how-much-debt-does-the-us-have/...
- nemomarx 18d ago
  You really really just need to raise taxes. Just find a way to sell that to the public (focus on the rich or large corporations or whatever outgroup you want basically)
  - apparent 18d ago
    Disagree. We have a spending problem, not a tax revenue problem. No matter how much the govt brings in, it will want to spend an increasing amount more.
  - ifyoubuildit 18d ago
    Is there anything that can't be solved by bigger government?
  - rayiner 18d ago
    Our budget deficit is $2 trillion. To close it, you need to significantly raise taxes on the fattest part of the income curve, which is the top 25%. They have $10 trillion of income. https://taxfoundation.org/data/all/federal/latest-federal-income-tax-data-2025/ https://taxfoundation.org/data/all/federal/latest-federal-in.... An across the board 200 basis point increase would close the deficit. That would raise their taxes to 38% at the low end to 46% at the high end, which is perfectly fine. The problem is that the top 25% isn’t an “out group” in either coalition. You have Facebook PMs who vote blue and guys who own a small plumbing company who vote red both making $1 million+ annually and neither wanting their own taxes to go up. Then there are the guys below them looking up. Over 10% of the country will be in the top 1% of earners at some point in their life. So the guys pulling in a few hundred K as a senior engineer or construction manager don’t want their taxes to go up either.
    - what 18d ago
      > taking half of someone’s money is totally fine Okay. Then let’s also reduce what’s spent welfare/benefits by a similar amount, at least we’re not taking money they worked for.
      - rayiner 18d ago
        No, U.S. benefits are at a typical level for an OECD country. The problem is the taxes. U.S. taxation is only 25% of GDP, versus 40% in western Europe. We could raise taxes $3 trillion annually and still be at the level of one of the more responsible European countries like the U.K.
    - leptons 18d ago
      The wealthy have been taxed appropriately in the past, we just need to do it again. There is precedent. The Peak Year (1944): The 94% rate applied to taxable income over $200,000 (which included a 3% regular tax and a 91% surtax). That $200,000 would be incomes over $3.8 Million today. The High-Tax Era: Top marginal rates remained above 90% for two decades, spanning from 1944 through 1963. This is supposedly the era that made America "great".
pixl97 18d ago
Yay stagflation!
hdgvhicv 18d ago
It’s worse than no ability to fix it — he caused a large part of it for unclear reasons
- base698 18d ago
  Covid? Half the money printed happened under his watch the first admin. Biden continued the other half. Now we have yet another war to make matters worse. What are you proposing be done to fix it?
  - c0nducktr 18d ago
    Well I sure wouldn't have started another war.
- Supermancho 18d ago
  > he caused a large part of it for unclear reasons Technically it was Besset, but Trump gave him the reigns. The purpose seems to be to radically debase the dollar and setup a crises that requires an entitlement cut (Social Security) for "the good of the economy" while also expanding military spending at the same time.
almost_usual 18d ago
Long term bond yields are not directly tied to the Fed funds rate. The problem is the debt purchased by the Fed during QE had extremely low yields (COVID era) the reserves held by banks created by the Fed during QE now cost more to service by the Fed.
gloryjulio 18d ago
There is also insane amount of debt from ai related investment. China's free model is crushing the ai margins while these companies need to pay their debt and obligations. The debt bomb clock is ticking. The next few years would be fun.
stymaar 18d ago
QE without public debt sterilization is going to appear as the costliest macroeconomic mistake of the early 21st century.
- AnimalMuppet 18d ago
  Disagree, fairly strongly. In 2008, four trillion dollars evaporated. In order to keep the economy from completely crashing, the Fed created $4T using QE and such tricks. The result was 15 years of flat. No inflation for 15 years. If inflation shows up a decade and a half later, that probably wasn't the fault of how QE was done.
  - stymaar 18d ago
    You're getting my point wrong: - I absolutely agree that inflation has nothing at all to do with QE, people who claimed that are just idiots who have a gold fetish. - the problem I'm talking about is the fact that central banks didn't use QE as an opportunity to erase the public debt it bought. At the time it wouldn't have been an issue in any way. But now because inflation is back (due to oil) central banks cannot buy government bonds when they reach maturity and have to raise rates. Then the government bonds have become very expensive, and it has to be paid to the private sector on the market, so whenever a US govt security reaches maturity, the budget constraint increases. Sterilization of the debt would have alleviated this issue a lot at no cost. Also, we should have taken the lessons of the era and raise the inflation target to 4%[1] at that time (it was definitely politically achievable then, now not so much). [1]: https://www.imf.org/en/publications/wp/issues/2016/12/31/the-case-for-a-long-run-inflation-target-of-four-percent-41625 https://www.imf.org/en/publications/wp/issues/2016/12/31/the...
    - AnimalMuppet 18d ago
      I see. Well, what you propose might have the minor problem of being illegal for the Fed to do. I'm not perfectly sure (and I don't want to take the time to research this rabbit hole right now), but the Fed is deliberately different from the Treasury. It's not supposed to fund the government by creating money. At a minimum, doing so would have created doubts about the future of the dollar. (Because countries that start having the central bank create money to fund the government often wind up in runaway inflation, with the currency becoming worthless.) As to a 4% target: Given that they were stuck at 0% for the next decade (and tried, and failed, to get up to 2%), why would they move the target to 4%? They already couldn't do what they said, why double their failure?
ThunderSizzle 18d ago
The country has been _run_ by fools for 26 years. Congress has had 26 years to do something about the fiscal situation, and we've had four presidents, and the fiscal responsible side of the electorate is never listened to. Both sides are to blame - neither will fix the problem. Obama could've made that his goal - he was competent, had a lot of political good will, and many people were frustrated at the bailout policy Bush did, but instead it was inflationary printing (quantitative easing), Obamacare and Cash 4 Clunkers (which the used car market still hasn't recovered from). I never voted for him - I didn't view him as honest, nor did he seem to indicate that he liked America, but was rather just a good talker - but I think he could've been a great president given a less radicalizing agenda. He was probably the best situated president in terms of timing to fix the debt problem, but instead it was a good time for divisive politics. By the time Obama finished, it became clear neither party actually cared about the fiscally conservative Ron Paul supporting voting block.
- hsbalanxvxjsmab 18d ago
  I would love to hear what was "radical" or "divisive" about Obama's policy. A significant portion of the country disliking him because of his skin color doesn't make his policies "radical"
  - aftbit 18d ago
    A universal health care mandate were both radical and divisive, and the popular nickname for the ACA today is "Obamacare". I happen to think the policy was a good idea, and voting to keep it in play was the best vote of John McCain's career ... but it was definitely both radical and divisive. Now, much of the "mandate" has been stripped away, health care remains a mess, and access is far from affordable, but you can't really blame that one on Obama.
    - doom2 18d ago
      > A universal health care mandate were both radical and divisive It seems quite ironic, given the frequent complaints about the inability of Congress to either govern effectively or fix health insurance (for many and various definitions of "fix"), that the ACA was so divisive. At least it got passed! Yet given the opportunity twice (2017-2019, 2025-2027), a politically viable alternative hasn't been offered up by opponents of the ACA, let alone being able to fully repeal it.

by kadoban 18d ago

ihsw 18d ago

[dead]

rayiner 18d ago

> And the country is run by a broken fool who has no interest or ability to fix any of that. Trump will be gone in three years, but you'll still have an electorate that wants more free stuff while also getting tax cuts. There is zero appetite for fiscal reform in the U.S. The geometric growth rate of U.S. debt has been consistent since 2010 and will remain so when AOC is President: https://usafacts.org/answers/how-much-debt-does-the-us-have/country/united-states/ https://usafacts.org/answers/how-much-debt-does-the-us-have/...

nemomarx 18d ago
You really really just need to raise taxes. Just find a way to sell that to the public (focus on the rich or large corporations or whatever outgroup you want basically)
- apparent 18d ago
  Disagree. We have a spending problem, not a tax revenue problem. No matter how much the govt brings in, it will want to spend an increasing amount more.
- ifyoubuildit 18d ago
  Is there anything that can't be solved by bigger government?
- rayiner 18d ago
  Our budget deficit is $2 trillion. To close it, you need to significantly raise taxes on the fattest part of the income curve, which is the top 25%. They have $10 trillion of income. https://taxfoundation.org/data/all/federal/latest-federal-income-tax-data-2025/ https://taxfoundation.org/data/all/federal/latest-federal-in.... An across the board 200 basis point increase would close the deficit. That would raise their taxes to 38% at the low end to 46% at the high end, which is perfectly fine. The problem is that the top 25% isn’t an “out group” in either coalition. You have Facebook PMs who vote blue and guys who own a small plumbing company who vote red both making $1 million+ annually and neither wanting their own taxes to go up. Then there are the guys below them looking up. Over 10% of the country will be in the top 1% of earners at some point in their life. So the guys pulling in a few hundred K as a senior engineer or construction manager don’t want their taxes to go up either.
  - what 18d ago
    > taking half of someone’s money is totally fine Okay. Then let’s also reduce what’s spent welfare/benefits by a similar amount, at least we’re not taking money they worked for.
    - rayiner 18d ago
      No, U.S. benefits are at a typical level for an OECD country. The problem is the taxes. U.S. taxation is only 25% of GDP, versus 40% in western Europe. We could raise taxes $3 trillion annually and still be at the level of one of the more responsible European countries like the U.K.
  - leptons 18d ago
    The wealthy have been taxed appropriately in the past, we just need to do it again. There is precedent. The Peak Year (1944): The 94% rate applied to taxable income over $200,000 (which included a 3% regular tax and a 91% surtax). That $200,000 would be incomes over $3.8 Million today. The High-Tax Era: Top marginal rates remained above 90% for two decades, spanning from 1944 through 1963. This is supposedly the era that made America "great".

pixl97 18d ago

Yay stagflation!

hdgvhicv 18d ago

It’s worse than no ability to fix it — he caused a large part of it for unclear reasons

base698 18d ago
Covid? Half the money printed happened under his watch the first admin. Biden continued the other half. Now we have yet another war to make matters worse. What are you proposing be done to fix it?
- c0nducktr 18d ago
  Well I sure wouldn't have started another war.
Supermancho 18d ago
> he caused a large part of it for unclear reasons Technically it was Besset, but Trump gave him the reigns. The purpose seems to be to radically debase the dollar and setup a crises that requires an entitlement cut (Social Security) for "the good of the economy" while also expanding military spending at the same time.

almost_usual 18d ago

Long term bond yields are not directly tied to the Fed funds rate. The problem is the debt purchased by the Fed during QE had extremely low yields (COVID era) the reserves held by banks created by the Fed during QE now cost more to service by the Fed.

gloryjulio 18d ago

There is also insane amount of debt from ai related investment. China's free model is crushing the ai margins while these companies need to pay their debt and obligations. The debt bomb clock is ticking. The next few years would be fun.

stymaar 18d ago

QE without public debt sterilization is going to appear as the costliest macroeconomic mistake of the early 21st century.

AnimalMuppet 18d ago
Disagree, fairly strongly. In 2008, four trillion dollars evaporated. In order to keep the economy from completely crashing, the Fed created $4T using QE and such tricks. The result was 15 years of flat. No inflation for 15 years. If inflation shows up a decade and a half later, that probably wasn't the fault of how QE was done.
- stymaar 18d ago
  You're getting my point wrong: - I absolutely agree that inflation has nothing at all to do with QE, people who claimed that are just idiots who have a gold fetish. - the problem I'm talking about is the fact that central banks didn't use QE as an opportunity to erase the public debt it bought. At the time it wouldn't have been an issue in any way. But now because inflation is back (due to oil) central banks cannot buy government bonds when they reach maturity and have to raise rates. Then the government bonds have become very expensive, and it has to be paid to the private sector on the market, so whenever a US govt security reaches maturity, the budget constraint increases. Sterilization of the debt would have alleviated this issue a lot at no cost. Also, we should have taken the lessons of the era and raise the inflation target to 4%[1] at that time (it was definitely politically achievable then, now not so much). [1]: https://www.imf.org/en/publications/wp/issues/2016/12/31/the-case-for-a-long-run-inflation-target-of-four-percent-41625 https://www.imf.org/en/publications/wp/issues/2016/12/31/the...
  - AnimalMuppet 18d ago
    I see. Well, what you propose might have the minor problem of being illegal for the Fed to do. I'm not perfectly sure (and I don't want to take the time to research this rabbit hole right now), but the Fed is deliberately different from the Treasury. It's not supposed to fund the government by creating money. At a minimum, doing so would have created doubts about the future of the dollar. (Because countries that start having the central bank create money to fund the government often wind up in runaway inflation, with the currency becoming worthless.) As to a 4% target: Given that they were stuck at 0% for the next decade (and tried, and failed, to get up to 2%), why would they move the target to 4%? They already couldn't do what they said, why double their failure?

ThunderSizzle 18d ago

The country has been _run_ by fools for 26 years. Congress has had 26 years to do something about the fiscal situation, and we've had four presidents, and the fiscal responsible side of the electorate is never listened to. Both sides are to blame - neither will fix the problem. Obama could've made that his goal - he was competent, had a lot of political good will, and many people were frustrated at the bailout policy Bush did, but instead it was inflationary printing (quantitative easing), Obamacare and Cash 4 Clunkers (which the used car market still hasn't recovered from). I never voted for him - I didn't view him as honest, nor did he seem to indicate that he liked America, but was rather just a good talker - but I think he could've been a great president given a less radicalizing agenda. He was probably the best situated president in terms of timing to fix the debt problem, but instead it was a good time for divisive politics. By the time Obama finished, it became clear neither party actually cared about the fiscally conservative Ron Paul supporting voting block.

hsbalanxvxjsmab 18d ago
I would love to hear what was "radical" or "divisive" about Obama's policy. A significant portion of the country disliking him because of his skin color doesn't make his policies "radical"
- aftbit 18d ago
  A universal health care mandate were both radical and divisive, and the popular nickname for the ACA today is "Obamacare". I happen to think the policy was a good idea, and voting to keep it in play was the best vote of John McCain's career ... but it was definitely both radical and divisive. Now, much of the "mandate" has been stripped away, health care remains a mess, and access is far from affordable, but you can't really blame that one on Obama.
  - doom2 18d ago
    > A universal health care mandate were both radical and divisive It seems quite ironic, given the frequent complaints about the inability of Congress to either govern effectively or fix health insurance (for many and various definitions of "fix"), that the ACA was so divisive. At least it got passed! Yet given the opportunity twice (2017-2019, 2025-2027), a politically viable alternative hasn't been offered up by opponents of the ACA, let alone being able to fully repeal it.